Tsakos sets S&P targets
Tsakos Energy Navigation is hoping to increase its VLCC fleet in an improving market and has plans to dispose of some of its older vessels.
Chief executive Nikolas Tsakos also has an eye on growth of the shuttle tanker fleet after the owner booked itsbest annual results in six years yesterday.
Tsakos says the company could increase its VLCC exposure via the purchase of second-hand vessels, which will be covered by long term contracts.
Its interest in VLCCs comes amid success in the market of late. In February the owner found storage work for its only VLCC, the 301,000-dwt Millennium (built 1998), on a six month deal worth around $10m.
Storage success
Tsakos said on a conference call the vessel was fixed at $55,000 daily, compared with a breakeven of around $12,000 per day.
He explained the deal would significantly help the owner’s bottom line over the next couple of quarters.
Indeed, Clarksons Capital analyst Omar Nokta says he expects earnings per share of $0.29 in the first quarter of 2015, which would be the owner’s highest quarterly result since 2009.
Tsakos adds that vessels built between 2002 and 2005 are now renewal candidates. “We will be selling in today’s environment some of this and we will be looking to replace when the time is right,” he said.
He added: “But you might see TEN ordering additional shuttle tankers against 10, five, eight year long-term contracts, well accretive contracts. These are ships that will not put weight in the existing market because shuttle tankers are not participating in the day-to-day spot markets.”
Let the good times roll
The strategy comes a time when the Intertanko chairman has a positive view on the tanker market.
He said: “I hope this will be the start of a much more exciting period for the tanker market.
“The current oil price and the sale, supply and demand dynamic looks that we are in for at least a couple of good years, hopefully long years, and as long as most of the owners are able to protect ourselves by avoiding new buildings … I think we will be able to maintain a healthy market.”
New York-listed TEN put up a profit of $13.5m in the fourth quarter, after a $7.6m adjustment for bunker hedges is factored in, overturning a $35.6m red number from this point a year ago.
The profitable final quarter took the owner’s full year bottom line to $35.5m, against a $37.5m loss after impairments a year ago.
“With around $214m of cash on hand and a net debt-to-cap of only 46\% at the end of 2014, we believe the company could announce additional newbuilding and/or secondhand acquisitions in the coming months with long-term time charters attached which would increase TEN’s total contract coverage providing further support for a possible MLP spinoff in 2016,” said Doug Mavrinac of Jefferies.
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